Charlie Gasparino’s Gut Tells Him Trouble Is Brewing At Goldman Sachs, Though In Fairness That Could Just Be Last Night’s ChineseBy Bess Levin
Gary Cohn Chooses Not To Say, “I ran into Jamie Dimon on the first night of Hannukkah and asked him what it was like to have a menorah shoved up his ass” In The Presence Of A ReporterBy Bess Levin
Goldman Sachs emerged from the financial crisis as the whipping boy of Wall Street. But on Monday evening, the firm’s chief executive, Lloyd C. Blankfein, was feted like a king. Or perhaps like a rabbi. “Lloyd, I’d like to welcome you to your second bar mitzvah,” David K. Wassong, the co-head of private equity at Soros Fund Management, said at the annual Wall Street Dinner sponsored by the UJA-Federation of New York, a charitable organization focused on Jewish philanthropy. “The only difference is that tonight the money goes to UJA.” [...] For Mr. Blankfein and Gary D. Cohn, the No. 2 at Goldman, the evening reflected the firm’s prominent position on Wall Street and the public relations recovery it has undertaken since the crisis. One financial analyst, Michael Mayo, approached Mr. Cohn after the event and jokingly suggested that the folks at Goldman should send a Hanukkah present to Jamie Dimon, the chief executive of JPMorgan Chase, a bank that has recently fallen from favor in Washington after a number of run-ins with regulators. Mr. Cohn smiled at the suggestion. “I have a joke about that,” he said. But with a reporter present, he declined to tell it. [Dealbook]
As many of you well know, a time-honored tradition on Wall Street is complaining about the size of one’s bonus. It’s a ritual that financial services employees look forward to their whole year and occurs not only in bad times but in good. So cherished is the annual bitching o’ bonuses that even if one is paid an extremely handsome sum, to find out the guy or girl sitting them received $10 or $20 dollars more is to trigger a response that involves angry typing to a colleague about the injustice and a hissy-fit of impotent rage punctuated with threats of considering options elsewhere. According to Lloyd Blankfein, though, Goldman Sachs employees are different and recognize that if they have to make a little less money here and there, it’s for a greater good. Read more »
Charlie Gasparino: Gary Cohn Sick Of Watching Lloyd Blankfein Appear On A-1 Of The WSJ, While He’s Relegated To A Sidebar On Page 12 Of This Month’s Cat FancyBy Bess Levin
It’s just not fair! Read more »
We talked last week about how shareholders are really the last people you’d want running a bank, if you’re the sort of person who doesn’t like banks. Conveniently Jesse Eisinger is that sort of person, and he’s pissed at shareholders for how they’re running banks:
Shareholders can’t be counted on.
That’s the message from the dispiriting shareholder vote on whether to leave Jamie Dimon as both the chief executive and the chairman of JPMorgan Chase, or to split the roles. Even more shareholders backed him in his dual role this year than did last year.
For some time, reformers have hoped that shareholders might ride to the rescue to solve the problem of Bank Gigantism, otherwise known as Too Big to Fail.
Big-bank critics, like the freethinking analyst Mike Mayo, analysts at Wells Fargo, and Sheila Bair, the former head of the Federal Deposit Insurance Corporation — and others, including me — have raised the possibility that shareholders might revolt over banks’ depressed stock valuations and seek breakups. Broken-up banks would be smaller and safer.
No, it’s not going to happen. Shareholders are part of the problem, not the solution.
The problem in this telling is basically the limited liability corporation, which gives shareholders an option on the corporation’s assets; option pricing theory, which informs shareholders that volatility – of earnings, of “high-risk, high-return bets” where shareholders “capture the unlimited upside and their losses are capped” – increases the value of their option; and modern corporate governance, which informs bankers that they work for the shareholders and therefore should be maximizing the value of that option. With the bets and so forth. Read more »
Lloyd Blankfein Explains How, In Their Own Little Way, Commodities Are The Gay People Of Asset ClassesBy Bess Levin
Attending Harvard, surrounded by classmates with trust funds and blue blood, who had no idea what it was like to grow up in the projects. His years with those same WASPs, many of whom had probably never met a Jew. The period in which there was a lot more Lloyd to love, which coincided with the ‘You can never be too rich or too thin’ era. All experiences that likely made Lloyd Blankfein acutely aware of the fact that he was different, and maybe made him feel like a little bit of an outsider.
None of them, however, can compare to the most ostracizing experience of his life: working as a young commodities trader in an investment bank. Some might say it was the equivalent of being gay in a world that is yet to fully accept homosexuality. Read more »